International real estate advisor Savills has today released a research paper in which it suggests ways that governments, who own or control large real estate holdings, could monetize their assets. The report is issued alongside figures that record a drop in the value of projects developed under Public-Private-Partnerships (PPP) since the beginning of the global financial crisis in 2007 from E29.6 million to E15.74 by 2009 – one of the ways in which governments have preserved economic activity.
Savills research suggests that some governments own some of the best located sites that remain unexploited, and unlocking the potential behind these should release a source of income for the state. Historically, the UK as a developed property market has been most active in PPPs with over two thirds of total EU projects followed by Spain with 10% and Germany 5% share.
In terms of total value of projects Spain, Portugal and Greece have accounted for almost a quarter of the PPP projects since 1990, while the UK still accounts for more than half of the total value. However with PPPs as well as privatisation models such as sale and leasebacks and Tax Increment Financing governments can look to examples in Europe, US and Australia of successful strategies.
Eri Mistostergiou, director of Savills European research, says: “The recent disposal of government owned assets has found political and social opposition and criticism, causing delay across several European countries. We firmly believe that there are a number of options for governments that will improve service delivery, strengthen balance sheets and in some cases generate economic development and job creation.”
Alex Dawson, UK director of Savills public sector says "The cuts in public sector spending emphasise the need for rationalisation and provide opportunities to optimise the use of surplus assets. Partnerships to utilise the assets of the public sector by working with the skills experience and finance of the private sector should be encouraged between all public sector organisations and the private sector, to deliver benefits to all.
Savills suggests reviewing occupancy levels, consideration of sale and leaseback opportunities, encouragement of Tax Increment Financing in particular for infrastructure and regeneration projects, the introduction of effective legislation for PPPs and reformation of the planning system to favour economic activity are all areas in which public administration agencies should explore to exploit the value of property holdings.
Source: savills.co.uk